GENTERA REPORTS 3Q17 RESULTS Mexico City, Mexico – October 24, 2017 – GENTERA S.A.B. de C.V. (“GENTERA” or “the Company”) (BMV: GENTERA*) announced today non-audited consolidated financial results for the third quarter ended September 30, 2017. All figures were prepared in accordance with requirements from the National Banking and Securities Commission (CNBV) and are expressed in nominal Mexican pesos (Ps.)
3Q17 Highlights:
Total Loan Portfolio reached Ps. 31,221 million, a 2.0% contraction compared with 3Q16. Loan Portfolio per subsidiary was distributed as follows:
Banco Compartamos S.A. I.B.M. (Mexico) (Banco Compartamos) reached Ps. 22,689 million, a 7.8% contraction versus the figure recorded in 3Q16. Compartamos Financiera (Peru) stood at Ps. 8,033 million, an 18.4% increase vs. 3Q16; and, Compartamos S.A. (Guatemala) was Ps. 499 million, 5.0% higher compared to 3Q16.
With over 1.3 million debit accounts, deposits from Clients in Banco Compartamos stood at Ps. 1,454 million, which were generated from demand and time deposits, growing close to 6 times compared to the Ps. 253 million reached at the end of 3Q16.
Net Income for the second quarter was Ps. 750 million, an 18.3% contraction compared to the Net Income of Ps.918 million achieved in 3Q16. Earnings per share (EPS) in 3Q17 stood at $0.46.
Net Interest Income for 3Q17 was Ps. 4,909 million, a slight 0.1% increase compared to the same period last year, while NIM stood at 55.1%, compared to 57.2% in 3Q16.
ROE stood at 18.2%, compared to 24.8% during 3Q16. For the nine-month period 2017, it stood at 20.6%.
ROA reached 7.3%, compared to 9.3% in 3Q16. For the nine-month period 2017, it stood at 8.3%.
Non-performing loans (NPLs) for 3Q17 were 4.18%, compared to 3.33% in 3Q16.
Efficiency ratio for 3Q17 was 74.5%, compared to 68.2% reported in 3Q16.
Financial Results and Ratios 3Q17 Clients 1) Portfolio Net Income NPLs / Total Portfolio ROA ROE NIM NIM after provisions Efficiency Ratio Capital / Total Assets Average Loan per Client Employees Service Offices** Branches
3,762,479 31,221 750 4.18% 7.3% 18.2% 55.1% 45.5% 74.5% 40.9% 9,777 21,860 632 256
3Q16 3,352,677 31,866 918 3.33% 9.3% 24.8% 57.2% 47.3% 68.2% 38.3% 9,505 21,248 692 107
% Change 3Q16 12.2% -2.0% -18.3% 0.85 pp -2.0 pp -6.6 pp -2.1 pp -1.8 pp 6.3 pp 2.6 pp 2.9% 2.9% -8.7% 139.3%
9M17
9M16
3,762,479 3,352,677 31,221 31,866 2,562 2,870 4.18% 3.33% 8.3% 9.9% 20.6% 26.2% 54.2% 55.5% 44.2% 46.6% 71.5% 65.8% 40.9% 38.3% 9,777 9,505 21,860 21,248 632 692 256 107
1) 3,193,216 credit clients and 569,263 clients from Savings, Remittances and Insurance Products. Portfolio and Net Income are expressed in million (Mexican Pesos) In this table employees in Banco Compartamos include employees from ATERNA, YASTAS and INTERMEX. ** Some Service offices in Mexico are being transformed into Branches.
% Change 9M16 12.2% -2.0% -10.7% 0.85 pp -1.6 pp -5.6 pp -1.3 pp -2.4 pp 5.7 pp 2.6 pp 2.9% 2.9% -8.7% 139.3%
Comments from Mr. Enrique Majós, GENTERA’s CEO:
GENTERA concluded the third quarter of the year servicing over 3.7 million clients, through a network of 632 Service Offices and 256 Branches, and with a Staff of over 21 thousand employees distributed throughout Mexico, Peru and Guatemala, all fully committed to the Company’s purpose of eradicating financial exclusion. At the end of September 2017, GENTERA’s financial subsidiaries experienced a slight contraction in its credit portfolio; however, other strategic initiatives showed important progress such as our deposit program in Mexico which reached more than 1.3 million debit accounts, a key element in banking more clients and building long term relationships. ATERNA, YASTAS and INTERMEX continued to record solid performance. ATERNA concluded the third quarter with approximately 5 million active life insurance policies; YASTAS recorded nearly 1.9 million financial transactions, a solid growth of 43% compared to 3Q16; and INTERMEX, processed over 5,700 million pesos during the quarter. Our innovation lab, FIINLAB, continued its focus on developing new technological platforms and making alliances with Innovation Hubs that share our mission and that will help GENTERA to better serve the current and future financial needs of our Clients. At GENTERA we are strongly motivated and enthusiastic in what the future will bring for our clients and for the Company; in coming years we will continue our trajectory of growth and discipline in order to successfully achieve our long-term aspiration of servicing more than 10 million clients by 2025. We deeply believe that by creating value for the customers we will create shared value for the different stakeholders.
3Q17 Analysis & Results of Operations Summary Clients Portfolio* Net Income* ROAA ROAE NIM NIM after provisions NPL Write - offs Coverage Ratio Average Loan per Client Employees ** Service Offices Branches
Banco Compartamos 3Q17 2,659,145 22,689 623 8.9% 20.8% 68.1% 56.0% 4.37% 758 143.3% 8,532 17,372 493 256
Δ vs 3Q16 -9.0% -7.8% -32.2% -4.1 pp -16.1 pp 0.1 pp -0.4 pp 1.16 pp 25.7% -32.0 pp 1.3% 0.2% -14.7% 139.3%
Compartamos Financiera 3Q17 446,401 8,033 69 3.0% 13.9% 25.3% 20.9% 3.56% 91 170.3% 17,994 3,533 79 -
Δ vs 3Q16 27.0% 18.4% 37.9% 0.3 pp 3.1 pp 0.0 pp 0.8 pp -0.10 pp 1.5% -3.4 pp -0.1 pp 11.7% 11.3% 0.0%
Compartamos S.A. 3Q17 87,670 499 7.25 4.2% 4.6% 77.9% 67.4% 5.48% 13 123.1% 5,695 955 60 -
Δ vs 3Q16 9.5% 5.0% -49.1% -4.8 pp -5.2 pp 0.1 pp -1.6 pp 0.75 pp -18.8% 4.1 pp 0.0 pp 28.7% 39.5% 0.0%
* Portfolio and Net Income are expressed in million (Mexican Pesos) ** In this table employees in Banco Compartamos include employees from ATERNA, YASTAS and INTERMEX. Compartamos Financiera (Peru) is reported under Mexican GAAP (all figures in million pesos).
2 GENTERA 3Q17 Results
Income Statement The following financial results analysis is done with consolidated figures. The percentage comparisons are calculated for the third quarter 2017 versus the third quarter 2016, unless otherwise specified. The reader must take into consideration the FX movements in the comparison periods. Interest Income 5,357
5,213
5,137
3Q16
4Q16
1Q17
5,204
2Q17
5,291
3Q17
Interest income in 3Q17 was Ps. 5,291 million a 1.5% increase compared to 3Q16, driven by the repricing initiative of its credit products which started during the first quarter of 2017 and is now capturing more benefits of this initiative. The interest income generated year to date was Ps. 15,632, 6.6% higher than the interest income generated in the same period of 2016. Banco Compartamos represents most of GENTERA‟s current portfolio and interest income, with 72.7% and 84.7%, respectively.
Gentera‟s three main subsidiaries grant loans with different average outstanding balances per client (Ps. 8,532 for Banco Compartamos, Ps. 17,994 for Compartamos Financiera and Ps. 5,695 for Compartamos Guatemala). These variations in ticket size are related to the share of the group lending or individual lending products in their respective portfolio. The Yield for GENTERA‟s portfolio stood at 67.8%. GENTERA’s interest expense increased to Ps. 382 million, or 24.0%, compared to 3Q16. This increase reflects the effect of the reference interest rate adjustment in Mexico, which has increased 325 bps to 7.0% from June 2016 to September 2017.
The Funding Cost of Banco Compartamos in Mexico, which includes wholesale funding and deposits, stood at 7.21% in 3Q17 compared to 4.94% in 3Q16. Interest expenses at this subsidiary rose 31.1% to Ps. 278 million, compared to Ps. 212 million in 3Q16. At the end of the quarter 45.6% of Banco Compartamos liabilities (considering Interbank liabilities and Long-Term Debt issuances) were contracted at a fixed rate.
Compartamos Financiera in Peru increased its Interest Expenses by 14.5% to Ps. 110 million versus 3Q16, which implies a smaller growth compared to the 23.9% growth mark in the liabilities used to fund the portfolio. This was possible thanks to better terms and conditions in credit lines and improvements in the reference interest rate, which is now moving at 3.5% compared to 4.25% at the end of September 2016. Cost of funding, it stood at 6.2% compared to 7.0% in 3Q16.
GENTERA’s Net Interest Margin (NIM) for the third quarter 2017 reached 55.1%, an improvement compared to the 54.0% achieved in 2Q17, and 2.1 points behind the 57.2% reached in 3Q16. Provisions for loan losses reached Ps. 861 million during the quarter. This amount was Ps. 14 million, or 1.7% higher compared to 3Q16. This effect is in line with the evolution of the portfolio mix which is comprised of different risk profile products. Provisions are in accordance with new CNBV regulations and methodologies, reflecting the level required for each product.
3 GENTERA 3Q17 Results
NIM after provisions 1)
1)
Net Interest margin after provisions / Average Yielding Assets
47.3% 45.5% 43.5%
43.2% 41.7%
3Q16
4Q16
1Q17
2Q17
NII after provisions rose to Ps. 4,048 million, a slight contraction of 0.2% compared to Ps. 4,058 million in 3Q16. As previously mentioned, the Mexican Subsidiary, Banco Compartamos, implemented a growth control strategy with the purpose of stabilizing asset quality. This strategy has impacted the potential growth of the portfolio and, thus, the generation of interest income to a greater extent.
3Q17
NIM after provisions (NII after provisions for losses / average yielding assets) for 3Q17 was 45.5%, compared to 47.3% in 3Q16. The margin contraction in 4Q16 and 1Q17 is due to: i) the higher funding cost; and ii) higher cost of risk. These impacts have now been mitigated by the re-pricing initiative that Banco Compartamos started in its credit products during the first quarter. The net effect between commissions charged and commissions paid in 3Q17 reached a total of Ps. 246 million, an increase of Ps. 59 million, or 31.6%, compared to the net effect obtained in 3Q16 of Ps.187 million, and is explained as follows: Commissions 3Q16. This line Compartamos; Compartamos subsidiaries.
and fee income during the quarter contracted 5.2% to Ps. 346 million, compared to item mainly reflected: i) late payment fees charged to clients with delinquent loans at Banco ii) fees generated at YASTAS, ATERNA and INTERMEX; and iii) commissions generated at Financiera. The following table shows consolidated numbers of the different
Commissions and fee income 3Q17 3Q16 244 227 Banco Compartamos Compartamos Financiera 28 25 Yastás 5 46 Aterna 24 20 Intermex 45 47 Total
346
365
2Q17 256 30 5 16 48 355
Commissions and fee expenses during the quarter contracted 43.8%, or Ps. 78 million, to Ps. 100 million compared to 3Q16. The main reason for this contraction in expenses has to do with the fact that a greater number of Banco Compartamos‟ disbursements and collection operations of its credits are being executed in GENTERA‟s channels, representing, at the end of September ‟17, 79% and 47% respectively. This line item included: i) fees charged by third parties to Banco Compartamos for the use of their networks; as well as, ii) fees related to the operation of YASTAS and INTERMEX. The following table shows consolidated numbers of the different subsidiaries.
Commissions and fee expense 3Q17 3Q16 55 98 Banco Compartamos Compartamos Financiera 13 6 Compartamos Guatemala S.A. 2 2 SAB 1 1 Yastás 18 56 Servicios 1 1 Intermex 10 14 Total
100
178
2Q17 62 16 2 18 1 10 109
4 GENTERA 3Q17 Results
Trading gains/losses recorded a profit of Ps. 3 million during the quarter. This line item represented the FX profits in the INTERMEX-Banco Compartamos branches. Other Operating Income/Expenses during 3Q17 represented an expense of Ps. (50) million. This item reflected non-recurring income or expenses, which for the third quarter were primarily driven by a provision linked to the fees of delinquent accounts and by Donations. Operating expenses reached Ps. 3,164 million, a 16.1% increase versus the Ps. 2,725 million reached in 3Q16. GENTERA‟s subsidiaries jointly totaled 21,860 employees, an increase of 2.9% compared to 3Q16, due to the growth in number of employees in the Peruvian and Guatemalan subsidiaries. The new hires are required to serve current and future customers.
Salaries and benefits represented approximately Ps. 1,973 million, or 62.4% of total operating expenses.
During 3Q17, GENTERA had 493 service offices and 256 branches in Mexico, 79 service offices in Peru and 60 in Guatemala for a total of 632 Service Offices and 256 Branches. Together, these service offices and branches (SO&B) represented Ps. 540 million, or 17.1% of operating expenses. The current number of service offices and branches was 11.1% larger than the 799 service offices and branches reported in 3Q16, totaling 888.
Other strategic initiatives and advisory services, such as: i) the SAP platform and the ERP; ii) the deposit pilot projects; and, iii) YASTAS, among other initiatives, jointly represented Ps. 428 million or 13.5% of operating expenses during 3Q17.
Marketing Campaigns represented Ps. 223 million, or 7.1% of operating expenses, during the second quarter, including the investment associated with the loyalty program in Banco Compartamos which totaled Ps. 142.3 million this quarter.
Participation in Net Income from Non-Consolidated Subsidiaries represented a Ps. (16) million loss during the quarter, compared to a Ps. (17) million loss in 3Q16. This line item reflects GENTERA‟s minority contribution in Companies in which it has been investing. Net Income (Ps. million) 1,017
918
795
750
540
3Q16
4Q16
1Q17
2Q17
3Q17
For the third quarter of 2017, Net Income amounted to Ps. 750 million, which represents an 18.3% contraction compared to the Ps. 918 million net income recorded in 3Q16. For this third quarter Banco Compartamos represented 83.1% of GENTERA‟s total Net Income, whereas Compartamos Financiera in Peru represented 9.2%, and the other subsidiaries generated the remaining 7.7%. GENTERA concluded this nine-month period with an Accumulated Net Income of Ps. 2,562 million, representing a 10.7% contraction compared to the accumulated net income at the end of September 2016, when it stood at Ps. 2,870 million.
5 GENTERA 3Q17 Results
Balance Sheet Cash and other investments stood at Ps. 5,292 million during the third quarter of 2017. This level of liquidity enables us to cover operating expense growth, debt amortizations and expected portfolio growth for the following 30 days. It is important to note that 48.5% of the cash on the balance sheet corresponded to Banco Compartamos, with Ps. 2,569 million held in highly liquid assets. The remainder is held in GENTERA accounts in its various subsidiaries. Total Loan Portfolio (Ps. millions) & NPL 33,508
31,866
4.22%
32,368
31,426
31,221
3.95%
4.18%
2Q17
3Q17
4.69%
3.33%
3Q16
4Q16
1Q17
Total Loan Portfolio reached Ps. 31,221 million in 3Q17, a 2.0% contraction compared to the figure reported in 3Q16. The Loan Portfolio was distributed as follows: 72.7% at Banco Compartamos, 25.7% at Compartamos Financiera in Peru and 1.6% at Compartamos in Guatemala.
Credit Quality (Non-Performing Loans / Total Portfolio) Consolidated non-performing loans reached 4.18% in 3Q17, representing a slight deterioration when compared to the 3.95% recorded in 2Q17 and a deterioration compared to 3.33% in 3Q16, respectively, due to different risk profile products in the portfolio and to the effects of competition experienced in certain regions of Mexico. It is important to mention that Banco Compartamos‟ policy is to write-off loans that are past due after 180 days. 3Q17 PRODUCT
Portfolio
NPL
3Q16
NPL Ratio
WriteOffs
Portfolio
NPL
2Q17
NPL Ratio
WriteOffs
Portfolio
NPL Ratio
NPL
WriteOffs
16,713 5,976 22,689 Banco Compartamos Group Methodology Peru 1,393 Individual Methodolgy 6,640 8,033 Compartamos Financiera Group Methodology Gt. 499 499 Compartamos Guatemala S.A.
649 343 992 27 258 286 27 27
3.88% 5.73% 4.37% 1.96% 3.89% 3.56% 5.48% 5.48%
491 267 758 12 78 91 13 13
18,078 6,526 24,604 909 5,878 6,787 475 475
498 292 790 6 242 249 22 22
2.75% 4.47% 3.21% 0.67% 4.12% 3.66% 4.73% 4.73%
374 229 603 5 85 89 15 15
17,458 5,963 23,421 1,256 6,243 7,499 506 506
630 347 977 21 222 243 22 22
3.61% 5.82% 4.17% 1.69% 3.56% 3.24% 4.32% 4.32%
691 316 1,007 13 105 118 15 15
31,221
1,305
4.18%
861
31,866
1,061
3.33%
707
31,427
1,242
3.95%
1,140
Group Methodology Individual Methodology
Total
Performance Ratios and Metrics Coverage Ratio The 3Q17 coverage ratio was 148.9%, which is in accordance with the portfolio mix and Mexican financial regulations.
173.7% 156.4%
156.3% 148.9%
142.5%
3Q16
4Q16
1Q17
GENTERA 3Q17 Results
2Q17
3Q17
6
Goodwill amounted to Ps. 892 million and was related to the acquisition of Compartamos Financiera and INTERMEX, which was recorded as an asset.
ROAE/ROAA 24.9%
24.8%
19.4%
18.2%
7.7%
7.3%
13.8% 9.6%
9.3% 5.2%
3Q16
4Q16
1Q17 ROE
2Q17
During 3Q17, GENTERA reached a return on average equity (ROAE) of 18.2%, compared to 24.8% in 3Q16. Return on average assets (ROAA) for 3Q17 was 7.3%, compared to 9.3% in 3Q16. ROAE for the nine-month period 2017 was 20.6%, and ROAA for the same period was 8.3%
3Q17
ROA
Other 3Q17 Highlights:
YASTAS recorded approximately 1.9 million financial transactions during the quarter, 42.9% higher than those executed in 3Q16.
ATERNA ended the quarter with close to 5 million active life insurance policies throughout its operations in Mexico, Peru and Guatemala.
INTERMEX with more than 2 thousand affiliates processed more than Ps. 5,700 million in remittances payments.
According to the dividend approved on April 20, 2017, at the Company‟s Annual Shareholders Meeting, the second and final payment equivalent to Ps. 0.38 will be paid on December 1st, 2017.
On August 9, 2017, Fitch Ratings affirmed Banco Compartamos‟ Viability Rating (VR) at „bbb‟, as well as its foreign- and local-currency long- and short-term Issuer Default Ratings (IDRs) at „BBB‟ and „F2‟, respectively. The Rating Outlook on the Long-term IDRs was updated to Stable from Negative. Its national scale long- and short-term ratings were also affirmed at „AA+(mex)‟ and „F1+(mex)‟.
At the end of the third quarter, GENTERA repurchased 1,215,000 shares through the Company‟s stock buyback program established on April 20, 2017. Shares outstanding as of September 30, 2017 amounted to 1,623,336,415.
During 3Q17 GENTERA's Staff participated in 227 volunteer activities and programs in different communities, devoting more than 16 thousand hours and benefiting more than 21 thousand people. In 3Q17, GENTERA invested more than Ps. 40 million pesos in Corporate Social Responsibility activities focused on education, volunteering and support in contingencies. During September 2017, the Corporate and Social Responsibility department, through Fundación Gentera, implemented a support program for those affected by the earthquakes in Mexico through a campaign of donation of resources, activation of collection center in Mexico City and sending timely assistance to affected areas.
7 GENTERA 3Q17 Results
GENTERA Consolidated Income Statement For the three and nine months ended September 30, 2017 and 2016 (in millions of Mexican pesos) 3Q17
3Q16
% Change 3Q16
2Q17
% Change 2Q17
9M17
9M16
% Change 9M16
Interest income
5,291
5,213
1.5%
5,204
1.7%
15,632
14,660
6.6%
Interest expense Net Interest Income
382 4,909
308 4,905
24.0% 0.1%
381 4,823
0.3% 1.8%
1,165 14,467
831 13,829
40.2% 4.6%
Provisions for loan losses Net interest income after provisions
861 4,048
847 4,058
1.7% -0.2%
939 3,884
-8.3% 4.2%
2,670 11,797
2,217 11,612
20.4% 1.6%
Commissions and fee income
346
365
-5.2%
355
-2.5%
1,033
999
3.4%
Commissions and fee expense
100 3
178 16
-43.8% -81.3%
109 8
-8.3% N/C
316 2
522 28
-39.5% -92.9%
(50) 3,164 1,083
(265) 2,725 1,271
N/C 16.1% -14.8%
(6) 3,054 1,078
N/C 3.6% 0.5%
(9) 8,943 3,564
(107) 7,900 4,110
N/C 13.2% -13.3%
Trading gains (losses) Other operating income (expense) Operating Expenses Net operating income Participation in net income from non consolidated and associated subsidiaries Total income before income tax Current Deferred Net income Participation (in net income) from controlling company Participation (in net income) from non-controlling company
(16)
(17)
-5.9%
(5)
N/C
(26)
(61)
N/C
1,067
1,254
-14.9%
1,073
-0.6%
3,538
4,049
-12.6%
334 (17) 750
529 (193) 918
-36.9% N/C -18.3%
177 101 795
88.7% N/C -5.7%
937 39 2,562
1,432 (253) 2,870
-34.6% N/C -10.7%
743 7
914 4
-18.7% 75.0%
792 3
-6.2% 133.3%
2,548 14
2,861 9
-10.9% 55.6%
GENTERA Consolidated Balance Sheet As of September 30, 2017 and 2016 (in millions of Mexican pesos) 3Q17
3Q16
% Change 3Q16
2Q17
% Change 2Q17
5,292 29,916 1,305 31,221
4,354 30,805 1,061 31,866
21.5% -2.9% 23.0% -2.0%
5,830 30,184 1,242 31,426
-9.2% -0.9% 5.1% -0.7%
1,943 29,278 1,073 1,178 94 3,338 892 41,145
1,843 30,023 1,126 951 3 2,564 913 39,934
5.4% -2.5% -4.7% 23.9% N/C 30.2% -2.3% 3.0%
1,941 29,485 967 1,109 68 3,215 891 41,565
0.1% -0.7% 11.0% 6.2% 38.2% 3.8% 0.1% -1.0%
1,753 4,262 8,579 6,250 3,463 24,307
406 2,569 8,006 10,618 3,046 24,645
N/C 65.9% 7.2% -41.1% 13.7% -1.4%
1,414 3,896 9,567 6,553 4,035 25,465
24.0% 9.4% -10.3% -4.6% -14.2% -4.5%
4,764 558 Capital reserves 1,462 Retained earnings 7,154 Other capital accounts 285 Net income for the year 2,548 Participation (in net income) from controlling company 16,771 Participation (in net income) from non-controlling company 67 Total stockholders' equity 16,838 Total liabilities and stockholders' equity 41,145
4,764 558 1,295 5,226 544 2,861 15,248 41 15,289 39,934
0.0% 0.0% 12.9% 36.9% -47.6% -10.9% 10.0% 63.4% 10.1% 3.0%
4,764 550 1,474 7,172 275 1,805 16,040 60 16,100 41,565
0.0% 1.5% -0.8% -0.3% 3.6% 41.2% 4.6% 11.7% 4.6% -1.0%
Cash and other investments Total performing loans Non-performing loans Total loan portfolio Allowance for loan losses Loan portfolio, net Other accounts receivable Fixed assets Permanent investment Other asssets Goodwill Total assets Clients' Deposits Long Term Debt Issuance Interbank loans Other accounts payable Total liabilities Capital stock
Premium on sale of stock
8 GENTERA 3Q17 Results
The following section sets forth the non-audited financial results for the third quarter of 2017 (3Q17) for Banco Compartamos, S.A. I.B.M. (“Banco Compartamos” or “the Bank”), which is GENTERA‟s main subsidiary and is located in Mexico. All figures are expressed in Mexican pesos in accordance with the CNBV regulations applicable to credit institutions and may vary due to rounding.
Financial Highlights
Clients Portfolio Net Income NPLs / Total Portfolio
% Change 3Q16
3Q17
3Q16
2,659,145
2,921,211
22,689
24,604
623
% Change 9M16
9M17
9M16
-9.0%
2,659,145
2,921,211
-7.8%
22,689
24,604
-7.8%
919
-32.2%
2,130
2,573
-17.2% 1.16 pp
-9.0%
4.37%
3.21%
1.16 pp
4.37%
3.21%
ROA
8.9%
13.0%
-4.1 pp
10.1%
12.3%
-2.2 pp
ROE NIM
20.8%
36.9%
-16.1 pp
23.8%
34.2%
-10.4 pp
68.1%
68.0%
0.1 pp
65.9%
66.1%
-0.2 pp
NIM after provisions
56.0%
56.4%
-0.4 pp
53.8%
55.7%
-1.9 pp
Efficiency Ratio
75.7%
64.0%
11.7 pp
72.2%
64.8%
7.4 pp
ICAP
37.2%
26.8%
10.4 pp
37.2%
26.8%
10.4 pp
Capital / Total Assets Average Loan (Ps.)
44.6%
36.2%
8.4 pp
44.6%
36.2%
8.4 pp
8,532
8,423
1.3%
8,532
8,423
1.3%
17,096
17,063
0.2%
17,096
17,063
0.2%
493
578
-14.7%
493
578
-14.7%
Employees Service Offices* Branches
256 107 139.3% 256 107 139.3% Portfolio and Net Income are expressed in millions of Mexican pesos. * Some of the Service offices transformed into Branches.
3Q17 Highlights:
Total loan portfolio reached Ps. 22,689 million, a 7.8% contraction compared to the loan portfolio reached in 3Q16.
Non-performing loans stood at 4.37% in 3Q17, compared to 3.21% in 3Q16.
Net income for 3Q17 reached Ps. 623 million, a contraction compared to the Ps. 919 million in 3Q16.
Capitalization Ratio stood at 37.23%.
ROA was 8.9%, compared to 13.0% in 3Q16, while ROE was 20.8%, compared to 36.9% in 3Q16.
Results of Operations Interest Income (Ps. millions) 4,535
4,595 4,310
3Q16
4Q16
1Q17
4,405
4,482
2Q17
3Q17
Interest income reached Ps. 4,482 million in 3Q17, 1.2% less than 3Q16, however, not impacted in the same proportion as the contraction in the loan portfolio. This line item benefited from the re-pricing initiative that Banco Compartamos started in February of this year.
9 GENTERA 3Q17 Results
The Funding Cost, which includes liabilities and deposits from the public, stood at 7.21% in 3Q17 compared to 4.94% in 3Q16. Interest expenses rose 31.1% to Ps. 278 million, compared to Ps. 212 million in 3Q16. This growth is explained by the increase in the reference interest rate. As previously mentioned, the cost of funds increased during 3Q17. However, it was relatively stable considering that the Central Bank raised interest rates by 325 bps or more than 86% taking into account that in June 2016, the reference interest rate was at 3.75% and at the end of September 2017 it stood at 7.00%. It is worth highlighting that at the end of the quarter, 45.6% of the Company‟s liabilities were contracted at fixed rate. As a result of the aforementioned, Banco Compartamos reported a Net Interest Income of Ps. 4,204 million, a 2.8% contraction compared to 3Q16. Provisions for loan losses were Ps. 745 million, driven by the contribution of Credito Comerciante; Credito Crece y Mejora and Credito Individual products in the portfolio during 3Q17, which accounted for 49.5% of the portfolio. Net Interest Margin (after provisions) 56.4%
56.0% 52.8% 50.3%
48.1%
3Q16
4Q16
1Q17
2Q17
3Q17
1) Net Interest margin after provisions / Average Yielding Assets
NII after provisions rose to Ps. 3,459 million, a 3.5% contraction compared to Ps. 3,584 million in 3Q16. NIM (Net Interest Margin) after provisions (NII after provisions for losses / average yielding assets) for 3Q17 was 56.0%, compared to 56.4% in 3Q16. This ratio showed an improvement when compared to the 52.8% reached in 2Q17. The margin contractions that the Bank had during 1Q17 and 4Q16, were attributed to: i) higher funding costs; and, ii) higher cost of risk. However, with the repricing strategy that started in 1Q17, the margins have improved to similar levels as those observed in 2016.
Net Operating Income
Commissions and fee income reached Ps. 250 million, a 7.3% increase versus 3Q16. This line item was mainly driven by collection fees and penalties charged to clients with delinquent accounts, representing 37.4% of fee income, as well as sales commissions for voluntary life insurance policies, which accounted for 57.3%. The remaining 5.3% was related to other concepts and fees.
Commissions and fee expenses totaled Ps. 119 million, representing a 23.7% decrease when compared to 3Q16. This line item mainly reflected: i) 27.0% collection and disbursement fee costs; ii) 31.8% for alternative locations to pay and withdraw loans from Banco Compartamos; iii) 11.5% for the free voluntary life insurance coverage included in the Credito Mujer product; and iv) 29.7% fees paid to YASTAS and other fees.
Trading gains/losses stood with a profit of Ps. 3 million during the quarter due to FX exposure during this third quarter.
Other income/expenses reached a Ps. (48) million loss. This item reflected non-recurring income or expenses, which for the third quarter were primarily driven by a provision linked to the fees of delinquent accounts and by Donations.
Operating expenses for 3Q17 rose 14.7% to Ps. 2,683 when compared to 3Q16, primarily attributable to: i) the conversion of service offices into new branches; and ii) the execution of strategic initiatives.
10 GENTERA 3Q17 Results
Net Income Net Income (Ps. millions) 919
829 678 546
3Q16
4Q16
1Q17
2Q17
623
Banco Compartamos reported a Net Income of Ps. 623 million, representing a contraction of 32.2% versus 3Q16. Accumulated Net Income as of September 30, 2017 totaled Ps. 2,130 million, a 17.2% contraction compared to the same period last year.
3Q17
Balance Sheet Cash and other investments increased by 10.4% to Ps. 2,569 million, compared to Ps. 2,327 million in 3Q16. This amount represents the funds required by Banco Compartamos to cover operating expenses, debt maturities and loan portfolio growth for the following 30 days. Cash and other investments are placed in short-term instruments where the counterparty risk is approved by the Board‟s Risk Committee.
Total Loan Portfolio Loan Portfolio (Ps. million) 24,604
25,063
24,214
23,421
22,689
5.14% 4.49%
4.17%
4.37%
3.21%
3Q16
4Q16
1Q17
2Q17
3Q17
The loan portfolio reached Ps. 22,689 million, a 7.8% contraction compared to the Ps. 24,604 million reported in 3Q16. This performance is explained by the control phase strategy started in late 2016 with the objective of stabilizing asset quality; however, this has impacted the potential growth of the Bank during 2017 and particularly in the third quarter. The average outstanding balance per client in 3Q17 was Ps. 8,532, 1.3% above the Ps. 8,423 reported in 3Q16.
Loan Products & Credit Quality The loan products offered by Banco Compartamos are distributed under two main categories (Group and Individual Methodologies): 1. Group Lending Methodology: Merchant Credit (Credito Comerciante) and Women Credit (Credito Mujer) represented 73.7% of the total loan portfolio in 3Q17, which combined presented an NPL of 3.88% for this 3Q17, compared to 2.75% in 3Q16. 2. Individual Lending Methodology: Improvement Loans (Crece y Mejora), Additional Loans (Credito Adicional) and Personal Loans (Credito Individual) represented a 26.3% share of the total loans portfolio in 3Q17, with a consolidated NPL of 5.73% in 3Q17, compared to 4.47% one year ago. During 3Q17 total NPLs reached 4.37%, a deterioration when compared to the 3.21% recorded in 3Q16, and also a slight deterioration vs. the 4.17% reported in 2Q17.
11 GENTERA 3Q17 Results
Banco Compartamos’ policy is to write-off loans that are past due after 180 days. During the third quarter, this figure reached Ps. 758 million, or 25.7% more than that recorded in 3Q16. For 3Q17, the coverage ratio (allowance for loan losses / non-performing loans) was 143.4% compared to 175.3% in 3Q16. Allowance for loan losses is based on the methodology established by the CNBV, which requires specific reserve coverage for each originated loan: Group Loans with a solidarity figure and a different coverage for Individual Loans. It is important to highlight that our methodology follows the rules that apply to the „Personal Credit’ category instead of the „Consumer Loans, Not Revolving, Others’ category, as described previously. The allowance for loan losses by qualification was distributed as follows: 3Q17 Risk
%Allowance
Balance
3Q16 Allowance
%Allowance
Balance
2Q17 Allowance
%Allowance
Balance
Allowance
A-1
1.1%
14,323
160
0.5%
16,961
85
1.1%
14,176
159
A-2
2.7%
937
25
2.4%
125
3
2.7%
1,144
30
B-1
3.5%
198
7
3.8%
641
24
3.4%
291
10
B-2
4.1%
1,581
65
4.6%
2,401
112
4.1%
1,642
67
B-3
5.7%
523
30
5.6%
453
25
5.7%
487
28
C-1
7.2%
1,874
135
6.7%
1,966
131
7.4%
1,602
119
C-2
11.0%
1,198
132
10.0%
548
55
10.9%
1,459
159
D
21.5%
502
108
22.9%
247
57
21.6%
487
105
E
71.2%
1,552
1,105
70.8%
1,261
893
71.7%
1,621
1,162
22,689
1,766
24,604
1,385
22,910
1,840
Total Coverage Ratio 1
1.78
1.76
1.82
Classification for allowance for loan losses is in accordance with CNBV regulations (Section V, Article 129, and Paragraph II) applicable to credit institutions since July 20131. Allowance for loan losses continued to sufficiently cover non-performing loans. The ratings and the allowance reported for the third quarter 2017 is the one corresponding as of June 2017, considering the modifications to the General Provisions for Credit Institutions published in the DOF (Diario Oficial Federación) on January 6, 2017; and for which its initial effect may be constituted over a period of twelve months according to the applicable regulation.
Total Liabilities During 3Q17, total liabilities reached Ps. 15,297 million, 16.4% below the Ps. 18,294 million recorded during 3Q16. All of Banco Compartamos‟ current liabilities are fully peso-denominated; therefore, there is no FX exposure. Banco Compartamos maintains a well-diversified funding mix with different sources: i) Long-term debt issuances: Banco Compartamos is a frequent issuer in the Mexican debt capital market. As of September 30, 2017, it had Ps. 8,580 million outstanding in Certificados Bursátiles Bancarios (Bank Bonds). ii) Strong capital base: 44.6% of total assets were funded with equity. iii) Credit lines with banks and other institutions: Banco Compartamos had Ps. 3,570 million in credit lines among various banking creditors (Development Banks and Commercial Banks). iv) Deposits: For 3Q17, deposits from Clients stood at Ps. 1,454 million, which were generated with over 1.3 million debit accounts and from the term investment product, while Ps. 520 million represented deposits from GENTERA‟s subsidiaries.
Total Stockholders’ Equity The capitalization ratio was 37.23% compared to 26.8% reported in 3Q16. The current ratio continues to reflect the Bank‟s strength in accordance with levels required by Basel III, and is well above the Mexican banking system standards. Banco Compartamos reported Ps. 10,657.7 million in Tier I capital and riskweighted assets of Ps. 28,623.3 million.
12 GENTERA 3Q17 Results
Banco Compartamos, S.A., Institución de Banca Múltiple Income Statement For the three and nine months ended September 30, 2017 and 2016 (in millions of Mexican pesos) 3Q17
% Change 3Q16
3Q16
% Change 2Q17
2Q17
9M17
% Change 9M16
9M16
Interest income
4,482
4,535
-1.2%
4,405
1.7%
13,197
12,825
2.9%
Interest expense Net Interest Income
278 4,204
212 4,323
31.1% -2.8%
276 4,129
0.7% 1.8%
848 12,349
566 12,259
49.8% 0.7%
Provisions for loan losses Net interest income after provisions
745 3,459
739 3,584
0.8% -3.5%
783 3,346
-4.9% 3.4%
2,272 10,077
1,927 10,332
17.9% -2.5%
Commissions and fee income
250
233
7.3%
264
-5.3%
752
622
20.9%
Commissions and fee expense
119 3
156 17
-23.7% -82.4%
127 7
-6.3% N/C
384 2
440 35
-12.7% -94.3%
Trading gains (losses)
(48)
(23)
108.7%
(27)
77.8%
(102)
(60)
70.0%
2,683 862
2,340 1,315
14.7% -34.4%
2,571 892
4.4% -3.4%
7,466 2,879
6,799 3,690
9.8% -22.0%
Total income before income tax
862
1,315
-34.4%
892
-3.4%
2,879
3,690
-22.0%
Current and Deferred Tax
239
396
-40%
214
11.7%
749
1,117
-32.9%
Current
214
424
-49.5%
124
72.6%
723
1,238
-41.6%
Deferred Net income
25 623
(28) 919
N/C -32.2%
90 678
N/C -8.1%
26 2,130
(121) 2,573
N/C -17.2%
Other operating income (expense) Operating Expenses Net operating income
Banco Compartamos, S.A., Institución de Banca Múltiple Balance Sheet As of September 30, 2017 and 2016 (in millions of Mexican pesos) 3Q17
3Q16
% Change 3Q16
2Q17
% Change 3Q16
Non-performing loans Total loan portfolio
2,569 21,697 992 22,689
2,327 23,814 790 24,604
10.4% -8.9% 25.6% -7.8%
2,675 22,444 977 23,421
-4.0% -3.3% 1.5% -3.1%
Allowance for loan losses Loan portfolio, net
1,422 21,267
1,385 23,219
2.7% -8.4%
1,435 21,986
-0.9% -3.3%
Other accounts receivable
766 574 2,437 27,613
795 444 1,881 28,666
-3.6% 29.3% 29.6% -3.7%
760 510 2,250 28,181
0.8% 12.5% 8.3% -2.0%
1,454 520 8,580 3,570 1,173 15,297
253 1,023 8,006 7,495 1,471 46 18,294
N/C -49.2% 7.2% -52.4% 0.0% -20.3% -100.0% -16.4%
1,199 451 9,567 4,000 1,271 16,488
21.3% 15.3% -10.3% -10.8% 0.0% -7.7% 0.0% -7.2%
558
542
3.0%
542
3.0%
506 9,123 (1) 2,130 12,316 27,613
490 6,768 (1) 2,573 10,372 28,666
0.0% 3.3% 34.8% 0.0% -17.2% 18.7% -3.7%
16 506 9,123 (1) 1,507 11,693 28,181
-100.0% 0.0% 0.0% 0.0% 41.3% 5.3% -2.0%
Cash and other investments Total performing loans
Fixed assets Other asssets Total assets Clients' Deposits Deposits Long Term Debt Issuance Interbank loans Derivates financial instruments Other accounts payable Deferred income tax Total liabilities Capital stock Contributions for future capital increases Capital reserves Retained earnings Remeasurements for employees benefit Net income for the year Total stockholders' equity Total liabilities and stockholders' equity
13 GENTERA 3Q17 Results
Compartamos Financiera (Peru)
The following section sets forth the non-audited financial results for the third quarter of 2017 (3Q17) for Compartamos Financiera, GENTERA’s Peruvian subsidiary. All figures are in Mexican pesos and may vary due to rounding. The Reader must take into consideration the FX movements in the comparison periods. Note: It is important to highlight that the analysis and figures are expressed in accordance with Mexican Generally Accepted Accounting Principles and CNBV (National Banking and Securities Commission) regulations. These figures are not comparable to the financial statements submitted to the Peruvian Superintendencia de Banca, Seguros y AFP (Peruvian Banking, Insurance and Pension Fund Commission).
Financial Highlights Summary Clients Portfolio Net Income NPLs / Total Portfolio ROA ROE NIM NIM after provisions Efficiency Ratio Capital / Total Assets Average Loan (Ps.) Employees Service Offices
3Q17
3Q16
446,401 8,032.6 68.8 3.56% 3.0% 13.9% 25.3% 20.9% 79.3% 21.1% 17,994 3,533 79
351,373 6,787.1 49.9 3.66% 2.7% 10.8% 25.3% 20.1% 81.9% 23.8% 19,316 3,163 71
% Change 3Q16 27.0% 18.4% 37.9% -0.10 pp 0.3 pp 3.1 pp 0.0 pp 0.8 pp -2.6 pp -2.7 pp -6.8% 11.7% 11.3%
9M17
9M16
446,401 8,032.6 165.1 3.56% 2.4% 11.0% 25.5% 20.2% 83.3% 21.1% 17,994 3,533 79
351,373 6,787.1 120.0 3.66% 2.3% 9.3% 24.4% 19.4% 84.5% 23.8% 19,316 3,163 71
% Change 9M16 27.0% 18.4% 37.6% -0.10 pp 0.1 pp 1.7 pp 1.1 pp 0.8 pp -1.2 pp -2.7 pp -6.8% 11.7% 11%
Compartamos Financiera‟s figures are reported under Mexican GAAP. Portfolio and Net Income are expressed in Mexican pesos (millions) and with their corresponding FX for the quarter.
3Q17 Highlights:
Total loan portfolio reached Ps. 8,033 million, 18.4% higher than that of 3Q16.
Non-performing loans stood at 3.56% in 3Q17, compared to 3.66% in 3Q16.
Active clients reached 446,401, a 27.0% increase compared to 3Q16. o
Group Loans (Credito Mujer) product represented 66.4% of the clients served in Peru, ending the period with 296,394 clients, 44.8% more clients than in 3Q16.
Compartamos Financiera reached a total of 79 service offices, 8 more offices than in 3Q16.
On October 17, 2017, Compartamos Financiera issued S/. 70 million in the Peruvian debt market. The tenor of this issuance is one year with an interest rate of 4.92% and was oversubscribed by 3.1 times. This issuance became the most successful one in terms of size and interest rate. 14
GENTERA 3Q17 Results
Compartamos, S.A. (Guatemala)
The following section sets forth the non-audited financial results for the third quarter of 2017 (3Q17) for Compartamos S.A., the Company’s Guatemalan subsidiary. All figures are expressed in Mexican pesos in accordance with Mexican Accounting Principles and Regulations, and may vary due to rounding. The Reader must take into consideration the FX movements in the comparison periods. Summary Clients Portfolio Net Income NPLs / Total Portfolio ROA ROE NIM NIM after provisions Efficiency Ratio Capital / Total Assets Average Loan (Ps.) Employees
3Q17 87,670 499.3 7.2 5.48% 4.2% 4.6% 77.9% 67.4% 90.6% 91.8% 5,695 955 60
3Q16 80,093 475.4 14.3 4.73% 9.0% 9.8% 77.8% 69.0% 81.7% 93.3% 5,935 742 43
% Change 3Q16 9.5% 5.0% -49.1% 0.75 pp -4.8 pp -5.2 pp 0.1 pp -1.6 pp 8.9 pp -1.5 pp -4.0% 28.7% 39.5%
9M17 87,670
9M16 80,093
499.3 40.4 5.48% 7.7% 8.5% 81.8% 71.8% 83.7%
475.4 35.3 4.73% 7.8% 9.0% 71.6% 63.0% 79.6%
91.8% 5,695 955 60
93.3% 5,935 742 43
% Change 9M16 9.5% 5.0% 14.5% 0.75 pp -0.1 pp -0.5 pp 10.2 pp 8.8 pp 4.1 pp -1.5 pp -4.0% 28.7% 39.5%
Service Offices Figures are expressed in Mexican pesos with its corresponding FX. Exchange rate as of September 30, 2017, from Quetzales to USD: 7.344 Exchange rate as of September 30, 2017, from USD to MXP: 18.159 Portfolio and Net Income are expressed in Mexican pesos (millions) and with their corresponding FX for the quarter. Source: Banco de Guatemala and Banco de Mexico.
3Q17 Highlights:
Total loan portfolio reached Ps. 499 million, 5.0% higher when compared to 3Q16.
Net Income for 3Q17 stood at Ps. 7.2 million compared to Ps. 14.3 million in 3Q16.
Non-performing loans stood at 5.48% in 3Q17, compared to 4.73% in 3Q16.
Active clients reached 87,670, a 9.5% increase compared to 3Q16.
Figures are expressed in Mexican pesos (millions) with their corresponding FX for the quarter.
About GENTERA
***
GENTERA, S.A.B. de C.V. (formerly Compartamos, S.A.B. de C.V.) is a holding company whose primary objective is to promote, organize and manage companies, domestic and international, that are subject to its investment policies. GENTERA was established in 2010 and is headquartered in Mexico. Its stock began trading on the Mexican Stock Exchange on December 24, 2010 under the ticker symbol COMPARC*. On January 2, 2014, the ticker symbol was changed to GENTERA*. Note on Forward-Looking Statements This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on Management’s current view and estimates of future economic circumstances, industry conditions, Company performance and financial results. The words “anticipates”, “believes”, “estimates”, “expects”, “plans” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of Management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.
15 GENTERA 3Q17 Results
